Zucked: the United States government wants to break up Facebook

The Federal Trade Commission wants Facebook to unwind its deals for Instagram and WhatsApp.


December 10, 2020

Less than 2 months ago, the US Department of Justice (DOJ) smacked Google with an antitrust case.

In perhaps the greatest “hold my beer” ever, another government agency — the Federal Trade Commission (FTC) — just launched an antitrust case of its own against Facebook.

And, unlike the Google case, this case is aiming for a breakup of its Big Tech target, according to the New York Times.

More than 40 states will join in on the lawsuit

The meat of the case concerns Facebook’s history of buying on-the-rise social apps, snuffing out future competition and reducing the end users’ experience.

Of particular note are Facebook’s acquisitions of:

  • Instagram for $1B in 2012
  • WhatsApp for $19B 2014

Today, Facebook is a $790B+ behemoth with annual revenue of $80B+ and 4 products that boast 1B+ users: Facebook (2.7B), WhatsApp (2B), Messenger (1.3B), Instagram (1.1B).

Few major antitrust cases have tried to unwind previous mergers

One of Facebook’s defenses is the very fact that the FTC approved these mergers years ago.

Facebook further contends that without its infrastructure and social expertise, the likes of Instagram and WhatsApp would not have seen the same growth.

In more recent years, Facebook CEO Mark Zuckerberg has latched onto TikTok as an argument against a breakup of Facebook:

  • First, the video app’s hockey stick rise proves that social media remains competitive.
  • Second, Facebook is a defense against the rise of social apps from China, a country which has a “dangerous” approach to internet regulation, according to Zuckerberg.

Prosecutors want to break up Facebook and block future deals

These are “some of the most severe penalties regulators can demand” according to the New York Times. The case — which took 18 months to put together — will likely take years to resolve.

Somewhat ironically, Facebook announced a $1B acquisition of chatbot startup Kustomer last week.

If the FTC wins this deal, the period of freewheeling Big Tech M&A may come to an end.

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